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CALIFORNIA CORPORATE & SECURITIES LAW

“Lead Independent Director” Or “Presiding Director”?

Neither California nor Nevada require that a corporation have either a “lead independent director” or “presiding director” and yet many corporations state that they have such a position.  Why? Item 407(h) of Regulation S-K requires that if one person serves as both principal executive officer and chairman of the board, a company must disclose whether it has a “lead…

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Bylaws And Supermajority Board Voting Requirements

Yesterday’s post concerned various provisions that, although not required to be included in the articles of incorporation, must be included if they are to be effective.  One of these provisions relates to supermajority voting requirements: A provision requiring, for any or all corporate actions (except as provided in Section 303 [removal of directors without cause],…

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Putting These Provisions In Bylaws Won’t Be Sufficient

Section 202 of the California Corporations Code lists those provisions that must be included in a California corporation’s articles of incorporation in order for them the be accepted by the Secretary of State for filing.  There are a number of other provisions that although not required to be included in the articles won’t be effective…

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Still More On Suing The CEO For Social Activism

Last week, I devoted several posts to the question of suing the CEO for social activism.  The catalyst for the discussion was an August 17, 2017 Op-Ed piece by Jon L. Pritchett and Ed Tiryakian in The Wall Street Journal.  That piece cited recent CEO resignations from the White House’s Council on Manufacturing and Target’s adoption…

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Shareholder Derivative Suit Or Derivative Action?

I have long puzzled over the question of which is correct – “derivative suit” or “derivative action”?  Historically, the term “suit” was used for proceedings in equity.  California courts have generally regarded shareholder derivative claims as equitable.   Nelson v. Anderson, 72 Cal. App. 4th 111, 127, 84 Cal. Rptr. 2d 753, 763 (1999).  Thus, one might…

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More On Suing The CEO For Social Activism

The last few days, I’ve been writing about the legal issues raised by Jon L. Pritchett and Ed Tiryakian in a recent opinion piece published by The Wall Street Journal.  To sum up the discussion so far, Professor Stephen Bainbridge responded to Messrs. Pritchett and Tiryakian by arguing that the business judgment rule should bar…

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Can Shareholders Sue CEOs For Corporate Social Activism?

In an August 17, 2017 opinion piece published in The Wall Street Journal, Jon L. Pritchett and Ed Tiryakian had the following message for shareholders: Our message to small shareholders of companies like Starbucks, Merck and Target: You can sue when a CEO decides to institute a corporate social-responsibility program that has no benefit to the business.…

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A Subsidiary Post

Not too long ago, I wrote about the Securities and Exchange Commission’s confusing classification of subsidiaries.  See The Case Of The Wholly Owned, But Not Totally Held, Subsidiary That May Or May Not Be 100% Owned.  Since this blog is concerned primarily with California corporate and securities laws, I would be remiss in not adding a…

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Another “Best Practices” May Not Be Best After All

For years, I’ve been critical of governance experts who promote “best practices” without any basis that these practices are actually effective, much less the best.  For example, the Harvard Law School’s Shareholder Rights Project undertook to push numerous companies to eliminate their staggered boards.  Two former SEC Commissioners took the Harvard SRP to task for advancing shareholder…

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A Field Guide To Distinguishing Directors From Officers

A colleague who is not a corporate lawyer recently noted that in common parlance directors and officers are often simply lumped together as the “same thing”.   He suggested that I devote a post to a primer on the differences between directors and officers.  As requested, here is my take on the subject: Directors can not act alone…

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